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Fintech Roundup: 7/4 – Global Payments

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Exciting week in the world of Digital Assets, with Bitcoin confirmed as the best performing asset in any class so far this year.

There are a lot of narratives around this, including uncertainty in the S&P 500, ongoing political turmoil due to Brexit, as well as a whale buy of 7000 BTC last week. No matter the reason, it’s fair to say sentiment is turning and information surrounding Bitcoin and Blockchain becomes more mainstream.

On to the main events this week


Global Payments ripe for disruption

Remittance services have long been earmarked as the area that cryptocurrencies are likely to break ground in mainstream markets. Roughly $5T in FX is traded every single day – most of this is for speculative reasons, however, the sheer volume demonstrates the need, the options and the market.

From a payments point of view, $715B is transacted across borders on an annual basis. Right now, for every $100.00 that moves across a border, the average fee is just shy of $7.00. This means there were fees of $50b collected by Banks and Payment Service providers.

Compare this to Bitcoin, where a single transaction of $194m was performed with a fee of 0.10c.

It is no surprise that Bloomberg this week reported on the trend of acquisition in the payments market, market it as a sector for investors to keep an eye on.

Global Payments firm was acquired for $34B by Fidelity National Information services in March. VISA are buying UK Payments firm Earthport for $198m after a tussle with Mastercard, who eventually settled on buying cross border payments company Transfast for an undisclosed fee.

All of this activity is in recognition of an industry that is experiencing hyper growth – predominantly from the ever-increasing diaspora of the global workforce, as well as the facilitation of commerce via the Internet.

Cross Border remittance services are difficult. A trusted relationship with local banking institutions needs to be formed, as well as payment rail standards. The timezones and having operational staff available at the time of the transaction is also problematic.  

For certain payment corridors, the funds need to be routed via several corresponding banking institutions, resulting in higher fees, and a longer time to settlement.

Coinbase this week announced their cross border payments service, partnering with Ripple, hoping to becoming a major name in the cross border remittence market

With IBM making headway with the WorldWire service in partnership with XLM, and traditional industry players making moves, the Coinbase announcement was timely.

Coinbase has suffered criticism in the past, alongside Ripple – however by enabling this service, available anywhere that Coinbase supports and where users are allowed to exchange USDT or XRP with their local currency, they are solving a very real problem that exists and that will bring us one step closer to mainstream adoption.


Big Banks form Blockchain Alliance

In another step towards adoption, some of the best known Financial Institutions in the world signed up to the International Association for Trusted Blockchain Applications (Inatba)

The organisation, based in Brussels, includes Ripple, Consensys, Barclays, BBVA and over 100 other organisations.

The goal of the organisation is to create industry standards to promote interoperability and a clear legal framework that will result in the adoption of DLT technology.

It’s shaping to be an exciting Q2 of 2019, and I expect the trend of adoption and positive public perception to continue.

Have a great week.

The Daily Chain – Inform. Educate. Succeed.

Mark

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